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German Retail Sales Rebound

By

Geoffrey T. Smith

Updated Dec. 1, 2010 2:53 a.m. ET

FRANKFURT—Retail sales in Germany rebounded in October after a disappointing September, adding further to evidence of an increasingly broad-based and self-sustaining recovery in Europe's largest economy.

The Federal Statistics Office, Destatis, said Wednesday that sales rose 2.3% in inflation- and seasonally adjusted terms in October. It also revised its original estimate of September's sales to a decline of only 1.8%, instead of the 2.3% originally reported.

Destatis bases its preliminary estimates on reports from seven of Germany's federal states that constitute three-quarters of national sales. Its calculations exclude sales of car and motor fuel.

In year-to-year terms, sales were still down 0.7%. But over the first 10 months of the year as a whole, they were up 1% from the corresponding period in 2009.

Most observers have said they expect the buoyancy of the German labor market—unemployment is at an 18-year low—to feed through into higher private consumption, something that could help mollify international criticism that Germany relies too much on exports to drive its economy.

The assumption of higher consumption still remains to be tested by the apparent slowdown of the world economy, and by the start of a radical attempt by the government to reduce the structural budget deficit, which kicks in next year and will last five years.

Destatis said that sales of food, drink and tobacco fell 2.4% in yearly terms, while sales at nonfood stores rose 0.5%. However, only half of Destatis's six sector categories registered positive rates of growth.

German Retail Sales Rebound

FRANKFURT—Retail sales in Germany rebounded in October after a disappointing September, adding further to evidence of an increasingly broad-based and self-sustaining recovery in Europe's largest economy.